What Can I Deduct When Moving for Work?

By AnnaMaria Andriotis

Question: I will be accepting a full time position approximately 165 miles from my current home, though my wife will continue to reside there. I plan to rent an apartment where I’ll be living permanently and I’ll have to move some of my belongings. I will probably make one trip back home each month at the most. I will also have to purchase a new computer and television set for work purposes. What portion, if any, of the monthly rental and/or moving costs in the new city would be deductible?

– Ross Steiner, Los Angeles, Calif.

Answer: Congrats on the new job. Some moving expenses are deductible. That includes the cost of moving personal belongings and driving to the new home, says Bill Fleming, managing director at PricewaterhouseCoopers Private Company Services practices. So, yes to the U-Haul, its gas costs, and your car’s gas costs for the one-time trip or 19 cents a mile for the drive in your car in 2011. Best of all, deductions are taken “above the line” without any income phase outs.

The trickiest part is qualifying for the deductions. The distance between the new job and the former (or in your case existing) home must be at least 50 miles greater than the old commute. The new job must be a full-time position and held for at least 39 weeks during the year after the move has been made. Also, moving expenses that are reimbursed by the employer are not deductible.

It appears that you meet these requirements and will qualify for the deductions even while holding onto your existing home, on which you can continue to receive deductions for the mortgage and property taxes.

Now here’s the bad news. Few other costs related to this move can be deducted. Drives back home to spend time with your wife are off limits, and so are rent, utilities, meals and pre-move house-hunting expenses, says Toby Johnston, a certified public accountant and certified financial planner at Mohler, Nixon & Williams, a tax firm in San Francisco. The exception is if you’re working from a home office in your new apartment, in which case deducting some rent is a possibility, he says.

Regarding the computer and TV, these could qualify as un-reimbursed business expenses. Combined with any other miscellaneous itemized deductions, only the excess over 2% of the adjusted gross income can be deducted. But be prepared to prove that they’re strictly for work with documentation and that they’re not being used for personal purposes. The latter could be hard to prove unless, says Johnston, you have a separate computer and TV for personal use.

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